CSR in the Public Sector

As the first country to mandate Corporate Social Responsibility (CSR), much has been written about India’s effort to finance sustainable development through corporate contributions. You can read my own attempt here. The body of literature on CSR by for-profit companies in the Indian context is robust. Yet, information on CSR by India’s public entities is less readily available. India’s Central Public Sector Enterprises (CPSEs) chart among the country’s largest and most lucrative businesses. Accordingly, many make massive CSR contributions under the Companies Act (which requires that companies meeting certain thresholds to allocate two percent of net profits to CSR projects). Despite this outsized role in the CSR ecosystem, how these companies approach CSR is under-studied. A more thorough understanding of how CPSEs conduct CSR is necessary to ensure these businesses employ strong institutional mechanisms that maximize impact and inclusion.

While serving as a fellow at the Indian Institute of Corporate Affairs and its National Foundation for Corporate Social Responsibility I examined how four Indian CPSEs are approaching CSR (one element of a sweeping study). Using secondary sources (i.e., scouring company reports, websites, and Google), I conducted a content analysis that explored how the companies approach CSR policy and strategy, project development and implementation, monitoring and evaluation, and other elements, as well as spending, administration, and application of tax. Some key findings (adapted from the unpublished study and provided below) are relevant to CSR policymakers as well as social sector organizations seeking CSR funding for projects.

Project Development

Each of the companies utilized a robust and defined stakeholder engagement process, incorporating community priorities as well as baseline and needs assessments into the project development process. Several companies explicitly address prioritizing longer-term projects, and one company referenced planning for exit. None of the companies referenced indicators or data collection methods or theories underpinning program design.

Implementation

The companies utilized a mix of in-house implementation, implementation agencies, and trusts established by the company for implementation purposes. All have a defined empanelment and due diligence process for selecting implementation agencies. For one of the companies, employees play a significant role in implementing CSR projects; for the remaining three, the use of CSR as an employee engagement tool is not publicly documented.  

Monitoring and Evaluation

Each company utilized a framework or plan for monitoring and evaluation, with CSR policies typically calling for a comprehensive and transparent monitoring mechanism (M&E). Reference to best practices such as setting up a separate budget for M&E, use of independent third parties, and site visits by teams or implementing agencies varied. Evaluation/ impact assessments were practiced by all companies, at least for large projects. Similarly, each of the companies referenced site visits in the impact assessments. Whether projects were monitored on a project-by-project basis, or whether mid-term monitoring is utilized, and other variables were not available.

Financial

Overall, the companies largely met the 2% spending requirement in 2018-19, an exception being a company that maintained carryovers that year. Administrative spending, excluding administrative expenditures to and by implementing agencies, ranged from 0.12% to 5%. Whether surplus arising from CSR projects constituted a part of business profits could not be determined, given an absence of publicly available policies or agreements between the companies, and implementing agencies. In terms of application of GST, applicability of GST on CSR projects is subject to various factors – such as hiring an implementing agency for the implementation of the CSR project or implementing the project in-house. Application of GST is contingent upon various factors that could not be ascertained from the publicly available data.

Takeaways

As highlighted in the above findings, how CPSEs approach CSR varies greatly. Detailed analysis suggested that each of the companies is exemplary in some aspect of CSR. For example, some have brilliant CSR policies that address key mechanisms and provide a clear process for each step of a project. Others have ambiguous CSR policies but have established a framework for stakeholder engagement that is deserving of an award. While several elements are common across all companies (a defined stakeholder engagement process, a framework for monitoring and evaluation, and a defined empanelment process for selecting implementing agencies), the companies are mostly alike in their dissimilarity. Overall, efforts to implement strong institutional mechanisms can be seen in some aspect of each company’s CSR work. Increased awareness of best practices, institutional support, and continual refinement are necessary to ensure CPSEs are are excelling across mechanisms and maximizing the impact of their CSR programs.

Dominique is serving as an American India Foundation (AIF) Clinton Fellow with the Indian Institute of Corporate Affairs in Gurugram, Haryana. For her Fellowship project, she is studying the national indicators for aspirational districts, identifying possible investment areas for corporate social responsibility, and creating a framework for corporate engagement. Dominique graduated with a Bachelor’s in political science in 2013 and a Master’s in community development and planning in 2015. With focuses in comparative politics and economic development, she went on to serve six years as a regional community development planner. As a principal planner with the Central Massachusetts Regional Planning Commission, she built and managed a program to shepherd communities through state initiatives, coordinated comprehensive planning efforts, and led a variety of community engagement and economic development initiatives. In this role, she also served as a municipal circuit rider, staffing town planning and economic development offices. Prior to her career in regional planning, Dominique worked in the private sector and completed government internships at the local, federal, and quasi-governmental levels. Her mission is to build pathways out of poverty using economic growth as a vehicle for social and economic opportunity. Through the AIF Clinton Fellowship, Dominique will be working on corporate social responsibility projects. She is excited to develop a broad knowledge of India’s development ecosystem, gain new tools and perspectives in community development, and contribute to initiatives serving under-resourced areas and populations.

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